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Strengthening Portfolio to Aid Square (SQ) in Q3 Earnings

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Square, Inc. (SQ - Free Report) is set to report third-quarter 2018 results on Nov 7.

The company’s strong focus toward delivering a better payment experience to the sellers and customers on the back of its innovative financial services is expected to continue aiding its market position in the global digital payment space.

Further, the company remains well poised to cater to the growing demand for payments processing and mobile-commerce services among small businesses worldwide, thanks to its expanding product and services portfolio.

Additionally, Square’s seller friendly ecosystem that enables the sellers to combine software, hardware and payments services in order to accept payment from the customers through its wide range of online payment products is a major catalyst.

All these factors are likely to drive the Gross Payment Volume (“GPV”) in the to-be-reported quarter which happens to be the key metric for the company’s top-line growth.

GPV in the last reported quarter increased almost 30.5% year over year and 20.2% on a sequential basis to $21.4 billion, driven by growth in larger sellers. Moreover, GPV from larger sellers contributed 50% to total GPV and surged 42% year over year.

The Zacks Consensus Estimate for GPV for the second quarter is pegged at $22.4.

Click here to know how the company’s overall Q3 performance is likely to be.

Square, Inc. Revenue (TTM)


Square, Inc. Revenue (TTM) | Square, Inc. Quote

Portfolio Strength: Key Catalyst

Strong product lines such as Square Register, Build with Square and API platforms are performing well. In fact, these product lines are attracting new sellers as well as retaining the existing ones. These are aiding the payment volume of Square.

Further, the company’s robust CashApp is bolstering its presence in the bitcoin space. Moreover, this particular space has been playing a significant role in driving its top-line growth over the past few quarters.

Moreover, the company’s product integration strategy continues to enhance payment solutions for businesses. Square’s strong initiatives toward integration of Caviar with Square for Restaurants are expected to attract more restaurants to its platform.

Further, the company continues to witness growing adoption of Cash Card, due to its customer friendly features and reward program called Cash Boost which provides instant discounts.

Additionally, the acquisition of Zesty and Weebly are expected to continue aiding growth to the company’s Caviar and omnichannel business, respectively.

During the third quarter, Square rolled out a toolkit named Square Reader SDK which aids the developers in building customized in-person checkout experiences for sellers and buyers. This move will strengthen the company’s solutions portfolio.

Additionally, the company’s focus on the automation front remains positive. Square is trying to make its services more self-serve. It is focusing on machine learning to automate internal as well as customer-facing experiences.

All these strong endeavors of the company toward enhancement of its key offerings are anticipated to aid its GPV, consequently driving its top-line growth in the to-be-reported quarter.

Zacks Rank and Stocks to Consider

Square carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Upland Software (UPLD - Free Report) , Adobe Systems (ADBE - Free Report) and Match Group (MTCH - Free Report) . While Upland Software sports a Zacks Rank #1 (Strong Buy), Adobe Systems and Match Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Upland Software, Adobe Systems and Match Group is currently pegged at 20%, 16.4% and 12.5%, respectively.

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